China Hits Dozens of U.S. Firms with Trade Restrictions in Retaliation

China imposed fresh trade restrictions on dozens of U.S. entities on Monday, retaliating against Washington's move to add more Chinese companies to a Pentagon list of businesses it accuses of aiding Beijing's military.

On Monday, the Chinese Ministry of Commerce placed 10 American industrial suppliers on its export control list, including rare earth miners MP Materials Corp and USA Rare Earth , and drone makers Teal Drones and Jaia Robotics — barring exports of any dual-use items originating in China to the companies.

Other companies included on the list are California-headquartered electronics manufacturer Aveox Inc, Ball Aerospace & Technologies Corp, and military equipment provider Oshkosh Defense.

In a separate statement Monday, the Chinese Finance Ministry excluded 46 U.S. companies, mostly defense contractors, from participating in government procurement projects. Any foreign-funded, locally registered entities associated with the excluded firms are exempted.

The actions came after the Pentagon earlier this month updated its so-called 1260H list by adding a slew of Chinese technology companies to a list of entities it believes to have aided Beijing's military. Alibaba Group , Baidu and carmaker BYD were among the latest additions.

Beijing's countermeasures appear to be largely symbolic, rather than a substantive escalation in U.S.-China relations, said Han Shen Lin, China country director at consultancy The Asia Group, as most targeted companies have "little or no meaningful business exposure in China."

The 1260H designation does not impose immediate sanctions but bars the U.S. Department of Defense from awarding direct contracts to affected companies starting June 30, with restrictions on indirect procurement following in 2027. The designation is likely to deter other federal agencies and commercial partners from doing business with listed companies.

Chinese authorities responded earlier this month, saying they would take all necessary measures to protect Chinese companies' "legitimate and legal rights and benefits," while criticizing the U.S. for "drawing up discriminatory lists under the pretext of national security."

The latest countermeasures provide a "model example" of how China will likely handle mild escalation from the U.S. while keeping the broader relationship stable, said Dan Wang, China director at Eurasia Group, adding that last month's Trump-Xi summit reset relations on a more positive footing.

While the Pentagon's move was largely symbolic, it showed how broadly Washington has drawn the line around sensitive Chinese technology, from artificial intelligence to consumer electronics and biotech, analysts say.

Several designated Chinese firms have disputed the designations while pledging legal action to seek their removal. Chinese smartphone maker Xiaomi won a court challenge that resulted in its designation being removed in May 2021.